Boston Student Loan Lawyer

Law Office of Adam S. Minsky

7 Reasons Why This Election Matters for Student Loan Borrowers

| Articles Current Events Default For-Profit Colleges Income-Based Repayment Income-Driven Repayment Loan Forgiveness Pay-As-You-Earn Policy & Reform Private Student Loans Taxes

The presidential party conventions are over, and what seems like the “election that never ends” will actually be over in less than 100 days.

A lot is being said about this election – that it’s the most important in a generation; that it could fundamentally change the United States and its place in the world; that our core national values are at stake. All of this may be true, and there’s plenty of analysis out there about how big and important it is.

But as a student loan attorney, I can tell you without hesitation that this presidential election is going to have a real, tangible impact on millions of student loan borrowers. It’s going to have significant, lasting consequences. What these impacts and consequences look like, however, will depend primarily on who wins this November. If you have student loans, you should be paying attention. Here’s why:Read More

July Student Loan News Roundup

| Articles Current Events For-Profit Colleges Policy & Reform

There’s been a lot going on in the world of student loans during the past couple of weeks. Here’s a summary:

  • This week, the Massachusetts State Senate passed a bill limiting the use of credit checks in hiring. This could provide some much-needed relief to consumers who have a negative credit history (such as a prior student loan default), which can cause ongoing problems in securing employment and housing. The bill now goes to the House.
  • The Massachusetts State Senate also passed a landmark bill providing substantial new protections from debt collectors. This has the potential to be a game-changer here in terms of student loan collections, especially for private student loans. The bill will be sent to the House, where we hope it will pass.
  • The U.S. Justice Department has launched a probe into whether Bridegepoint Education, the owner of Ashford University and the University of the Rockies, is violating a law that prohibits for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding. This is just the latest for-profit college chain to come under legal scrutiny.
  • Non-profit and for-profit colleges are having a bit of a panic attack as the U.S. Dept. of Education moves forward with new rules allowing for student loan forgiveness for borrowers whose schools engaged in fraud and misrepresentations. The rules still have to be finalized and will not be implemented until sometime in 2017.

It’s rarely a slow news day in student loan law. Expect more robust articles on these stories as they develop.

FedLoan Servicing is Literally The Worst

| Articles Current Events Income-Driven Repayment Loan Forgiveness Policy & Reform

I’m just going to come out and say it. FedLoan Servicing is literally the worst federal student loan servicer.

In many ways, all of the major student loan servicing companies have their problems, and it’s no wonder that the student loan servicing system as a whole has been repeatedly characterized as a dismal failure. But there is no servicer that is as consistently and embarrassingly awful as FedLoan Servicing.

The U.S. Dept. of Education’s major contracted loan servicing companies are the face of the federal student loan system. Servicers are the entities that borrowers must interact with on a regular basis. The servicing companies must be able to perform many critical operations for student loan borrowers – like processing payments, handling consolidation applications, approving people for repayment plans and properly calculating their monthly payments, and reviewing requests for emergency deferments and forbearances. Loan servicers are required to perform these operations under their contracts with the U.S. Dept. of Education. And borrowers have no choice but to work with their designated servicer – they do not have the ability to switch to a different student loan servicing company if they are unhappy.

Having worked with hundreds of student loan borrowers over the course of the past several years, I can say without any hesitation, without any reservation, that FedLoan Servicing (which is an arm of the Pennsylvania Higher Education Assistance Association, or PHEAA) is by far the worst of all of them. Based on a review of my docket just for the year 2016 thus far, a full 64% of my clients who have loans with FedLoan Servicing have experienced at least one serious problem during the past six months that was entirely caused by FedLoan Servicing. That’s nearly two out of three borrowers.

This is unacceptable.

FedLoan Servicing’s failures are as broad in type as they are deep in volume, and they span nearly every fundamental task that the agency is supposed to be performing. Here are some specific examples of FedLoan Servicing’s incompetence that I repeatedly encounter in my practice:Read More

4 New Debt Collection Rules in New York

| Articles Current Events Default Policy & Reform Private Student Loans

New York State recently implemented new, stronger laws regulating debt collectors – including debt collectors that pursue student loan borrowers. The changes go above and beyond what is required under federal debt collection laws and make New York one of the strongest states in the country for consumer protection.

Strengthening consumer debt collection laws is critical for student loan borrowers. Nearly one in four borrowers are delinquent or in default on their student loans, and that figure has been stubbornly persistent despite the addition of new repayment programs and increasing scrutiny on student loan servicing. It doesn’t help that federal student loan collectors have enormous powers to pursue defaulted borrowers. Private student loan lenders often engage in aggressive tactics as well, and may resort to filing lawsuits against student loan borrowers.

Here’s a summary of some of the major new rules in New York protecting student loan borrowers and other consumers:Read More

BREAKING: Proposed Student Loan Forgiveness Rules for Defrauded Students

| Articles Current Events For-Profit Colleges Loan Forgiveness Policy & Reform

I’ve been periodically writing about the U.S. Dept. of Education’s attempts to create a process for addressing borrowers who were defrauded by predatory for-profit institutions and who are seeking relief through Defense to Repayment. As I have previously written, while thousands of borrowers have applied for relief (and the administration has granted some relief to borrowers already), there is no regulatory structure in place to guide the government in deciding who should be eligible for relief, and how to make those determinations. As a result, the vast majority of Defense to Repayment applications submitted by student loan borrowers have been sitting in limbo.

When I last checked in with you all, the U.S. Dept. of Education was involved in what’s called “negotiated rulemaking,” whereby various stakeholders are invited to hash out the details about what a regulatory regime for student debt relief would look like.

Earlier this week, the Department issued proposed regulations for borrowers asserting Defense to Repayment. Here are the details:Read More

New York Student Loan Forgiveness Program

| Articles Current Events Loan Forgiveness Policy & Reform

New York recently created a new student loan forgiveness program designed to help recent graduates repay their loans. The new program, called the “Get On Your Feet Loan Forgiveness Program,” was created by Governor Cuomo.

Although it’s called a “loan forgiveness” program, “Get On Your Feet” is technically a repayment assistance program whereby the state of New York will cover your federal student loan payments for up to two years – if you meet certain criteria:

  • Income cap. Borrowers cannot earn more than $50,000 per year.
  • In-state residence. If you don’t reside in the state of New York, you don’t qualify.
  • In-state schooling. You must have graduated from a New York state high school, as well as a college or university located in New York.
  • Graduation date restrictions. Borrowers must have graduated after December 2014, and they must apply within two years of receiving their degree.
  • Undergraduates only. Borrowers with a degree higher than a Bachelor’s cannot apply.
  • Income-Driven Repayment. Borrowers must be enrolled in an income-driven repayment plan such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), or the new Revised Pay As You Earn (REPAYE) plan.
  • Good standing. Borrowers cannot be in delinquency or default on their federal student loans or their New York State student loans.

Note that there might be tax consequences to participating in the program.

Private student loans are unfortunately ineligible for the program – which certainly does little to help borrowers struggling under the weight of private student loan payments. Furthermore, under income-driven repayment plans like IBR and PAYE, monthly payments will generally be quite low for borrowers making under the $50,000 annual income cap. For example, a single borrower making $25,000 per year would pay approximately $60/month under the PAYE and REPAYE plans. A borrower making $40,000 per year would pay approximately $190/month under the same plans.

Nevertheless, despite the program’s restrictions and limitations, this represents a major step by one of the largest states in the country to provide much needed relief to new borrowers struggling to find a steady job. It is encouraging to see states like New York take action while the federal government is largely gridlocked and student loan reform remains stalled.

To learn more about New York’s “Get On Your Feet” student loan forgiveness program, check out the New York State Higher Education Services Corporation’s informational website.

Major Reforms Proposed for Student Loan Credit Reporting

| Articles Current Events For-Profit Colleges Policy & Reform Private Student Loans

Representative Maxine Waters of California has introduced sweeping legislation designed to improve the credit reporting system for student loan borrowers and other consumers.

Credit reporting has become a major national issue. Even with critical consumer protection laws like the Fair Credit Reporting Act (FCRA), creditors and credit bureaus often still report inaccurate information about people’s credit histories. This can have serious and damaging consequences – credit reports can be the deciding factor in obtaining housing or employment, and negative information can make a huge difference. And even when negative events are accurately reported on people’s credit reports, their effects can be far-reaching and long-lasting, since damaging credit report information can remain on a consumer’s credit report for many years.

This new bill, called the “Comprehensive Consumer Credit Reporting Reform Act,” is designed to increase protections for consumers and make credit reporting a bit more fair. Here are some of the highlights of the bill:Read More

Trump’s Higher Education Proposals

| Articles Current Events Policy & Reform

Last week Donald Trump, the presumptive presidential nominee for the Republican party, came out with some policy proposals for higher education and student loan reform. The campaign has indicated that these are somewhat informal policy ideas, rather than concrete proposals (which will be unveiled at an unspecified later date). Nevertheless, perhaps unsurprisingly, there have been some strong reactions. Here’s an overview.Read More

Why The Feds Must Allow Student Loan Refinancing ASAP

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Of the $1.3 trillion in outstanding federal student loan debt, the vast majority of it (somewhere around $900 billion, maybe more) is federal. One of the biggest hurdles facing federal student loan borrowers right now is high interest rates.

Federal student loan interest rates are set by Congress. While leaders from both parties touted the success of a bipartisan interest rate reduction bill passed by Congress and signed by the President a couple of years ago, this was merely a temporary fix. And the price of that fix is steadily increasing federal student loan interest rates across the board – especially for graduate students, who could see interest rates approach 10% in the coming years.

How big of a difference can a student loan’s interest rate make? Pretty big, to be honest. Read More

Obama Administration Fast-Tracks Loan Forgiveness for Over 500,000 People

| Articles Current Events For-Profit Colleges Loan Forgiveness Policy & Reform

In two recent moves, the federal government is fast-tracking federal student loan forgiveness for hundreds of thousands of borrowers who need it most.

First, the U.S. Dept. of Education has announced that it is streamlining and fast-tracking loan forgiveness requests for student loan borrowers who attended the now-defunct Corinthian Colleges chain. Thousands of students have submitted requests for debt relief under the poorly-defined “Defense to Repayment” clause, and the Department has been slow to respond since there is no formal application or defined process for review. However, the government just announced the creation of a simple online form that former Corinthian students can complete to request forgiveness under Defense to Repayment. Former students of 91 campuses in 20 states will be granted automatic federal student loan forgiveness after submitting this form. This has the potential to benefit nearly 100,000 students who were defrauded by Corinthian. If the Department expands loan forgiveness eligibility to graduates of all Corinthian campuses (it is unclear if this will actually happen), approximately 350,000 former students may benefit.

This week, the Obama administration also announced the fast-tracking of federal student loan discharges for borrowers who are totally and permanently disabled. A disability discharge has existed for federal student loan borrowers for quite some time, but few people know that this program even exists. Furthermore, the disability discharge application process has historically been a long, complicated and heavily bureaucratic experience, effectively locking out many borrowers who would clearly be eligible. The federal government intends to address these problems by proactively reaching out to federal student loan borrowers who would, under federal law, be automatically eligible for a disability discharge due to their disability designation by the Social Security Administration.  This has never happened before, and nearly 400,000 disabled borrowers may benefit from these outreach efforts.

All in all, this is excellent news for student loan borrowers who are struggling with debt that they will never be able to repay – either because of a disabling impairment that prevents them from working, or because of a predatory educational institution that engaged in fraud and other illegal conduct. This is part of a larger effort by the Obama administration to more strongly address the student debt crisis – it’s certainly not enough to address the systemwide problems, but it’s something, and more may be on the way. Stay tuned.